South Korean SK Telecom plans $1.8bn LTE investment

By Sofia Mitra-Thakur

Published Wednesday, May 18, 2011

SK Telecom plans to invest around $1.8 billion in LTE networks to cope with the huge growth in data traffic from smartphones.

South Korea's top mobile carrier originally planned to roll out nationwide LTE services in 2013, but an SK Telecom executive said the operator could launch services even earlier than planned depending on demand.

"We are making substantial investments in networks to withstand growing mobile data traffic," Kwon Hyok-sang, head of its network division, said at the Reuters Global Technology Summit.

South Korea's mobile phone penetration rates topped 100 per cent last year, and the smartphone market has boomed since the introduction of Apple's iPhone in late 2009.

Smartphone penetration is expected to reach 42 per cent in 2011, from just 2 percent in 2009, according to SK Telecom data.

However so far rapid growth in smartphone users has failed to translate into strong profit growth for carriers due to heavy network investments, tariff discounts and declining voice revenues.

Executive vice president Kwon said SK Telecom would launch commercial LTE networks in Seoul in July and expected to have more than 200,000 LTE subscribers by the end of the year.

He predicted that the number could jump more than 10-fold next year as it expands services to 23 cities

He was also upbeat about LTE demand, saying LTE services, which are five to seven times faster than 3G, would lure users with high-quality video calling, video streaming and interactive games.

"We are pinning high hopes on the LTE market, which we expect to grow explosively," Kwon said.

Analysts however say the new technology faces the challenge of offering differentiated services and competitive pricing to compete with existing standards.

Kwon also said the seller of Apple's iPhone and Samsung Galaxy S was not considering scrapping unlimited data plans, which were introduced by SK Telecom and its two smaller rivals last year despite investor concerns that they could overcrowd networks.

"The unlimited data plan is a promise we made to consumers and our stance is to maintain it," he said.

He also said the carrier was considering introducing unlimited data pricing for LTE users.